GENM- bottom-line jumped

Results Update

For QE30/6/2012, GenM's net profit increased by 83% q-o-q or 58% y-o-y to RM496 million while its revenue increased by 11% q-o-q or 12% y-o-y to RM2.12 billion. The improvement was attributed to increased earning from its Malaysian, UK & US operations.


Table 1: GenM's last 8 quarterly results


Chart 1: GenM's last 25 quarterly results

Valuation

GenM (closed at RM3.30 yesterday) is now trading at a PE of 13 times (based on last 4 quarters' EPS of 25.8 sen). If GenM can maintain the same level of earning as the quarter under review for the next 4 quarters, its forward EPS would be 35 sen. This would give a forward PE of 9 times. I believe the PE of this stock lies in between 9 & 13 times, which is quite attractive.

The negative for this stock is its stingy dividend payout policy & the setback in obtaining casino licenses in New York & Florida. If there is a change in any of these negative factors, the share price could rally higher. One positive spot that has yet to be fully factored into the share price is the return of Singaporeans to Resort World in Genting Highland. Due to the stiff fee of S$100 levied on any Singaporean visiting the Singapore casinos, some of these players have returned to the Malaysian casino where S$100 could be used as capital for their next roll of the dice rather than for paying the door fee!!

Technical Outlook

GenM is now resting on its intemediate uptrend line support at RM3.30. This is also the strong horizontal support for the stock.


Chart 2: GenM's weekly chart as at Aug 29, 2012 (Source: Quickcharts)

Conclusion

Based on good financial performance, attractive valuation & positive technical outlook, GenM is definitely a good stock to consider for long-term investment.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, GenM.